Gold futures settle at lowest since late August

Safe-haven appeal dulls on upbeat data, fiscal-cliff progress

SarahTurner

SAN FRANCISCO (MarketWatch) — Gold futures fell sharply on Tuesday to settle at the lowest level since late August, with a rise in U.S. home-builder confidence, progress in negotiations to avert the fiscal cliff and a credit-rating upgrade for Greece dulling the metal’s safe-haven appeal.

“Gold is not looking like a safe haven as Greece gets an upgrade and going over the fiscal cliff looks less likely,” said Phil Flynn, senior market analyst at the Price Futures Group. “Stocks look like a better bet and bond yields are providing a better return.” See: U.S. stocks lifted by hopes of fiscal-cliff deal.

Gold for February delivery
US:GCG3
fell $27.50, or 1.6%, to settle at $1,670.70 an ounce on the Comex division of the New York Mercantile Exchange. It had traded as high as $1,704.40.

The contract’s settlement price was the lowest since Aug. 30.

“Gold could not hold above $1,700 for too long and silver ran into resistance at the old support level of $32.50,” said Fawad Razaqzada, technical analyst at GFT Markets.

And news of a Plan B from Republicans regarding the fiscal cliff weighed on metals “as investors sought out racier assets such as stocks and high-beta currencies,” he said in a note. “Initially the selling was not too severe, due, in part, to sturdy support around $1,690 on gold and $32.15 on silver, but as stops below these levels were triggered, the selling accelerated.”

Silver for March delivery
US:SIH3
sank 61 cents, or 1.9%, to finish at $31.67 an ounce.

“Small steps toward an agreement are [supposedly] being made in Washington, but we prefer to act on a deal, not the expectation of one,” said Julian Phillips, contributor and founder of GoldForecaster.com, in a note.

A gauge of confidence among home builders rose in December to the highest level since April 2006, according to the National Association of Home Builders/Wells Fargo Housing Market Index released Tuesday. See: Home-builder confidence highest since 2006.

Gold is “such a thinly-traded market right now, sellers have the ability to push the market around further than it actually should,” said David Beahm, vice president at precious-metals investment firm Blanchard & Co. “Unfortunately, this may happen for the next two weeks as most investors take a break for the holiday.”

‘Gold is on sale and should be seriously looked at below $1,700.’
David Beahm, Blanchard &amp; Co.

But “gold is on sale and should be seriously looked at below $1,700,” he said.

Also Tuesday, March palladium
US:PAH3
shed $7.35, or 1.1%, to $690.95 an ounce, while January platinum
US:PLF3
lost $14.80, or 0.9%, to $1,593.70 an ounce, its lowest settlement in almost two weeks. Copper for March delivery
US:HGH3
fell 1 cent, or 0.3%, to end at $3.65 a pound.

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